Ukraine has proposed to defer payments on its international bonds for 24 months to avoid default. The country’s creditors vote this week on this government proposal to decide whether to back it or vote it down.

Our Of Counsel Rodrigo Olivares-Caminal, expert in expert in debt restructuring, comments on this proposal for Reuters.

Rodrigo explains that the two-year moratorium on external debt payments would allow Ukraine to avoid a contractual or legal default, as any amendment on the bonds’ terms would have the creditors’ backing.

In the article, Rodrigo algo explains that “a contractual default, a credit event and a credit rating default are three different albeit related concepts,” and that “incurring any of the three doesn’t mean that the other two will trigger.”

Ukraine faces a $5 billion monthly financing gap and liquidity pressures following Russia’s invasion on Feb. 24. Time is precious: the country has a $1 billion bond maturing on Sept. 1.

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